Pastor Ochoa, CFP

As a business owner, it can be difficult to find the time to focus on your eventual exit from your business when you're focused on the success of your business, but investing the time now can pay important dividends later including a smoother transition and a well-funded retirement.

So how can you build a successful business succession plan?

First, consider your various exit options.

You may wish to keep your business in your family, but family dynamics can complicate things.

Often family businesses fail in the second generation, so make sure you carefully consider your family member’s ability to take on a leadership role.

If there is a potential leader in your family consider grooming them as soon as possible.

Another option is a management buyout.

Normally the management team already understands the business and is well-known to your customers and suppliers.

However, they may have limited personal cash, so you may need to offer a favorable purchase price or financing to close the deal.

A third exit option is selling to an existing business partner.

This can be an attractive option with a quick close, especially if you have a shareholders agreement in place which sets the terms for selling your business interest.

Finally, they're selling to a third party.

Generally., this is the best option for maximizing your sale price.

However, it may involve disclosing confidential information, in some cases to a competitor.

Whichever exit option you choose it's important to get ready in advance.

Here are a few things to consider to make your business more attractive to potential buyers.

Develop a deep and talented management team, expand and diversify your customer base, established consistent recurring and high-margin cash flow and lastly keep your information systems up to date.

Another important part of your business succession plan is your retirement plan.

For many business owners their business is their retirement plan, but often it can take longer than you'd like to sell your business or you may not get the price you thought you would so it's important to set some money aside outside your business for your retirement.

One way you can do this is to an individual pension plan or IPP.

An IPP is a special retirement plan for incorporated business owners.

It enables you to make higher contributions compared to an RRSP that are tax deductible to your business.

And finally make sure you have the right advisory team in place including your lawyer, accountant, banker and financial advisor.

To learn more about business,succession planning, I invite you to contact an RBC Wealth Management advisor today.

Business is hard. It’s hard.

I mean Craig and I are pretty good at taking risks in retail and we’re pretty confident with the risks we take, but there’s still risks.

RBC has been a game-changer for us in what they’ve done.

They’ve taken us to the next level.

We went to a meeting in Vancouver, and there was a group of professionals there, and we looked at each other and we almost thought we walked into the wrong room.

It’s like, all these people are here for us?

We feel like a curtain has been pulled back and there is a whole set of resources that are available to us, that we weren’t aware of before.

And they have done some financial planning for us that goes beyond simple financial planning, but kind of family planning, estate planning, succession planning, financial literacy for children.

That part is so important.

We’ve got this detailed financial plan now.

Beyond a financial plan, it’s more like a life plan.

And it’s happened because of planning and because of this relationship we have with the people at the Royal Bank.

[Meet Sue and Drew RBC Wealth Management Clients]

[DREW:] Sue and I met at University. I was getting a coffee in the lounge and saw her and just fell in love. Just that simple.

[Drew and his partners recently sold their national network of veterinary hospitals “Calgary North Veterinary Hospital and Emergency Service”]

When the sale of the company came on there's a lot of things that came with that and taxes and creating trusts and things like that that you know aren't really our strength.

[SUE:] You're just relying on what you hear from friends, what you get online and you know, it's difficult because you're always worried you're going to miss something.

[DREW:] We had our goals. They were pretty roughed in goals. We didn't really know exactly how they would be actuated and the team pulled it together and sort of said, “Okay well if you want to do it, here’s the options.”

[VI LIVINIUK:] Drew and Sue sold their Veterinarian Practice.

So that meant that things on the financial front became a little more complicated, and they didn’t really know where to start.

[Vi Liviniuk, CIM, CFP, B.Ed. Vice President, Associate Portfolio Manager. RBC Dominion Securities Inc. RBC Wealth Management]

At that point it was important that would that I bring in all of my financial partners that are specialized in helping clients with different facets of their financial well-being. Whether it's a state planning, tax planning, insurance planning, right down to charitable giving.

[VAN THAI:]

[Van Thai, PFP. Private Banker. RBC Wealth Management]

If you're dealing with the advisor on investment front, and you dealing with me on the personal private banking front, it's just seamless. We are a team.

[Cody Cormier:]

[Cody Cormier, B.B.A. (Finance), LL.B., TEP Vice President, High Net Worth Planning Services RBC Wealth Management]

(Sue and Drew wanted to impart their values and beliefs to their son, but I suggested that they schedule annual family meetings and at that family meeting one of the things they could do is talk about philanthropy and setting up a private endowment fund inside a public foundation would be a good idea, and that endowment fund would generate income annually and it could get directed to the parents’ favorite charity or the son's favorite charity.

[DREW:] To have a fund that's of itself can can make its own wealth and not just be a stagnant donation every year that comes out of your general account. And it's doing quite well so that's also good for our charities.

[SUE:] Whenever we want to make a contribution, we just give them a call and it's all taken care of. We just have to give them the name of the charity and that's it.

[DREW:] It's a rewarding thing to put something together and then have it come through exactly how you envisioned it.

[SUE:] We have this team of people and they know us and they know what we want to do, what our goals are, what our aspirations are and I can’t say enough about it.

[UNKOWN WOMAN SPEAKING]

RBC Wealth Management is Canada's leading Wealth Manager. Our approach brings the best of RBC to you. Our resources solutions and full access to our team of experts, through one single contact, your Wealth Manager.

Simply put, there's wealth in our approach.

[Wealth Management Dominion Securities logo]

[Classical music playing, as a ships horn sounds off]

[Wealth Management Dominion Securities logo]

[Greg Cochrane]

I'm the President/CEO of fourteen hundred-fifty Souls.

Not a lot keeps me up at night, except for fourteen hundred-fifty souls.

It's my job. My job to take care of you and your families.

We emigrated from New Jersey in the fifties.

My dad and mom were Canadian and my dad was a crazy entrepreneur too. So, we started with Royal bank back in the fifties. You can imagine it was our go-to bank.

When I got into my own business, the bank was always there for me.

I got into my first full-time business when I was twenty-nine.

Our Banker was World Bank, and I remember bouncing paychecks and going to our commercial Banker in London.

The fear of just, closing down was the most important thing. I would have done anything to keep us open because, I believed we could turn this around.

I felt embarrassed because I had screwed this up.

He gave me the best advice.

He said “so we could call your loan now, but I believe you're going to turn this around with your partners. Now, I need you to do two things.”

I said, “What’s that?”

He said “give me your credit cards,” and I open up my wallet. He cut them right in front of us! Our Royal Bank credit cards, cut them, right in front of us!

He said “no more credit. It's all cash.”

It was the best advice I ever got.

When we sold that business in ninety-seven, while we had accomplished a lot, we realized the material gains that we were looking for, we were looking for security for ourselves, and our families.

The bank and the team that we have, it's a complete team. Think about this, it's like a mini family office you have.

Those folks, they know, they know what our goals are.

Our private bankers, and our folks at PH and N, and at DS they know about our family nucleus.

The bank has become simplified for me because I just hand over most of the challenges we have, whether it's a trust, my will, my RCA, to extensive loan portfolios.

They give me peace of mind.

It allows me to do what I'm good at. I can't/I don’t want to run money. I want to build businesses.

In 1994, I wrote down my purpose in life, and my roles of my responsibilities. And I figured out what my purpose was.

I was help helping others get what they want.

I'm here to serve fourteen hundred-fifty people at DCM.

I'm here to serve my partner's.

I'm here to serve my family.

Sometimes you screw up, but if you have that North Star that says, okay, that's what makes you happy.

I think that’s important.

[Wealth Management Dominion Securities logo]